Intel rolling back this 'major' chip design, CEO Pat Gelsinger says “..not a good way to run the business…”

Intel is reversing a major design decision in its laptop chips, CEO Pat Gelsinger has said. The change will come in the form of abandoning the on-package memory approach introduced with its Lunar Lake processors.

Why Intel is rolling back to older ways
During the earnings call, the company executives said that the Lunar Lake chip has the memory in the package that affects the gross margins. Gelsinger said that going-forward upcoming chips will have memory sticks .

So, as that shift occurred, obviously, this became a bigger margin implication, both for Lunar Lake and for the company overall. But we were very pleased to have the option to scale Lunar Lake and higher volume because of the momentum energy around the AIPC category. That said, a volume product and a volume industry like the PC industry , you don't want to have volume memory going through that channel. It's not a good way to run the business.

So, it really is, for us, a one-off with Lunar Lake. That will not be the case with Panther Lake, Nova Lake and its successors as well. We'll build it in a more traditional way with memory off-package and the CPU, GPU, NPU and I/O capabilities in the package. But volume memory will be off-package in the road map going forward.

And we won't have this kind of impact that we're dealing with for '25 in the margin structure, specifically around Lunar Lake. But again, it's a great product and we're happy that we have it in the portfolio, and we've scaled it commensurate with the enthusiasm of the AIPC category.

This announcement comes as a surprise as it had previously touted the benefits of on-package memory, particularly its potential to improve battery life in laptops by reducing power consumption associated with data transfer.

Intel said that the change reduces the power consumption of moving data through the system by approximately 40%.